Realty's new reality

Goodmanson attributes her success in a highly competitive market to her personality type.

“I’ve never done an open house. I don’t need to. Those are for agents who don’t know how to get business on their own. I have a large sphere of influence. I’m an extrovert. When I walk into a room, I can engage in conversation with anyone. People who work with me know that I’m a driver. I’m a go-getter. Another thing is that real estate isn’t my family’s sole source of income. If it was, I think my clients would feel that pressure.”

I used to have a bench ad

“The main reason I got my broker’s license was to become my own boss,” 32-year-old Ryan Hammond tells me. “I’m not giving a company a ton of my commission for an office and training — things I don’t want or need. When I started, my brokerage was Century 21 Award. They wanted over 50 percent of my commission. I don’t need coaching. I’m motivated enough myself. They wanted us to come in at 8:00 in the morning and do affirmations. I used to make fun of them with my wife. One thing they had us do was to rub our hands together and say, ‘Money, money, money! Yes!’ I was the guy in the back, thinking, Oh my god, I hate this. I absolutely cannot stand affirmations.”

Hammond has been a real-estate agent for seven years and a broker for four. He finds nearly all his clients via open houses. The rest are from referrals that past clients feed him.

“I used to have a bench ad.” The memory makes him laugh. “It was on Tierrasanta Boulevard. I paid two grand a year. I didn’t get any clients from it.”

Hammond takes his time with his clients. On average, he works with them for six to nine months before closing on a property. He often forms personal relationships. When Hammond got married, a former client served as his best man.

In 2012, Hammond’s income has taken a serious hit. As of December 1, he’s closed four deals, compared with his average of seven or eight. For him, it has nothing to do with lack of clients; he’s currently working with eight couples who are actively attempting to buy. He blames the changing real-estate market.

“Now, when you call an agent to tell them you have a client getting ready to write an offer, it’s not ‘Do you have any offers?,’ it’s ‘How many do you have?’”

Because of this, Ryan has shifted the way he does business.

“Nowadays, I have to really communicate with the seller’s agent as much as possible. I find out what I can about the other offers and how to promote my clients. There’s always a way to make my client’s offer look as attractive as possible. It’s a bigger challenge when you’re doing a [Federal Housing Authority or Veterans Administration loan] right now. You have to take it to the next level. With an offer I’m working on right now, I’ve talked to the listing agent for three hours over the phone.”

Despite having a bad year, Hammond remains optimistic.

“Most agents don’t last more than about ten years. They move on to something else. I’m going to work for at least the next eight. I don’t know if I want to work through another down cycle. I got into real estate at the very peak. My first clients bought at the absolute worst time. I was always upfront with my clients. I’d say, ‘You’re buying when prices are definitely going to go down.’ I don’t know if I’d feel good about getting people into homes once there’s another peak, knowing that prices are going to go down again. Once you start dealing with a down market, you have short sales and bank-owned properties. Whenever a bank’s involved, it’s just no fun.”

Lionel Silva speaks first, explaining how he has attempted to remain successful in a changing market.

“We’re all going after listings,” he says. “Listings move quickly. Working with buyers right now can be challenging.”

Flores elaborates, “The amount of offers we write is going up. Because prices are still low and rents are increasing, you have a lot of investors with cash that are buying up everything under $400,000. We’re competing with all cash. Anything under $500,000 typically receives multiple offers. If you have a listing, you’ll get investors who write all-cash, no-contingency offers with a 14-day close. You have all these poor VA or first-time FHA buyers come in with strong offers, but from a listing standpoint, it makes sense to go with the investor, even though you want to help out the military.”

“It can be extremely depressing,” Walkush adds. “We try to put a compelling story together when we send cover letters to the listing agent, saying, ‘Give this VA buyer a chance!’ Another thing that is knocking out the VA, FHA, and small-down-payment buyers is appraisals. Appraisers are appraising based on properties that closed 90 days or longer ago. They don’t want to recognize the upward movement of the market. So, you’re writing an offer for a VA buyer, and that seller is anticipating that the appraisal can come in $10,000–$15,000 lower. That puts the FHA buyer at a disadvantage. They can’t come up with the cash to cover what the banks aren’t willing to loan.”

“Appraisals have been issues since the 2008 meltdown,” Silva says.

Adds Goodmanson, “I’ve been speaking with appraisal managers who say, ‘We’re getting chewed out on both sides. If we bring in an appraisal and we don’t have comps to validate it, the bank will fire us.’ It’s not their fault. There’s risk on their side. That’s why they’re being cautious.”

“Buyers nowadays understand that they’re going to have to bid higher than they would like to,” Flores explains. “When you have an FHA buyer all excited to see a property, realistically, the likelihood of them getting into that property is low.”